READ THIS OR DIE! (The Truth Behind Scary Headlines)
Posted on March 10, 2011
Filed Under Investor Mistakes, Mutual Funds, Personal InvestingNot long ago a client forwarded me a solicitation email which contained dire predictions about the financial world. He was truly concerned, writing, “It is very uncomfortable to read stuff like this.”
I wrote back, “Then why do you read crap like that?”
First, this client and I have a long and friendly relationship, so excuse the language. But this well-educated man has a tendency, just like millions of others, to invest based on marketing headlines. I call it “education through advertisement.”
It’s dangerous to your wealth.
I’ve been in this business a long time, and I’ve seen the ad world from the inside. I can tell you that the only purpose of the headline is to push the Fear or Greed button so you will continue reading.
These ads typically are in the form of long letters and are signed by a supposed financial expert, but almost always they are written by professional copywriters. The messages have only one function – to get you to send money. They have no obligation to present a balanced picture, let alone truth. The same guy who wrote that ten page letter telling you the financial world is about to collapse will then be hired by another newsletter to tell you why you must INVEST NOW!! There are just a handful of these hired guns. They are very good, and they charge exceedingly large fees because they get the job done.
Here are a few other juicy headlines I’ve seen recently:
* “The Five Mutual Funds You Must Never Own!”
* “After 98 Years of Secrecy, the Greatest Economic Conspiracy in History is Finally Unfolding!”
* “The Profit-Blocking Secret Fidelity and Vanguard Hope You Never Learn!”
* “Learn how you could turn $5,000 into $100,000 (or more) by 2015 with this Safe and Simple Profit Protection Plan!”
Key words that the financial copy writers love include Explosive, Dangerous, Massive, Secret, Last Chance, and the ever popular Conspiracy.
There is a reason stuff like this is called “junk mail.” Recognize it for what it is, and file it accordingly. Base your investment decisions on reports and information from respected, credible sources.
By the way, to believe these “conspiracy” theories, you would have to believe that all the financial journalists in the U.S. are in on it – a preposterous assumption.
I recently saw a newspaper cartoon showing a group of business types sitting around the conference table. The head honcho is saying, “You can fool some of the people some of the time… let’s concentrate on those people.”
Don’t be one of those people.
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